CI-1099

September 4, 1985

SYLLABUS

1. A separate telephone line is required for a lawyer practicing law, sharing space with other businesses not involved in the practice of law, and engaging in non-law practice activities.
2. A lawyer may conduct a law practice and business activities in real estate and mortgage broker financing from the same office building, provided the two enterprises are separate and distinct in operation and appearance, and adequate safeguards are employed to maintain confidentiality in the law business. Further, while the two businesses may share common office space, separate entrances and reception areas are to be maintained.
3. A lawyer may use the designation "Member, State Bar of Michigan" in connection with the advertising of another business when the lawyer's qualifications in the other business are related to the law practice and the lawyer, by virtue of ownership, retains complete control over the use of the lawyer identification contained in the non-legal advertising material.
4. A lawyer may advertise so long as the advertising communications are not false, fraudulent, misleading or deceptive. Such information can be disseminated to anyone so long as the information is not directed to an individual or a group of individuals that have an already identified need for legal services urging the recipient to employ the services of the lawyer-sender.
5. A lawyer who has an interest, is an employee, or performs legal services for a real estate business or mortgage financing business may not accept referrals from such entities where such entities serve as vehicles for the referral of business, whether directly or indirectly.
6. A lawyer may associate with a business not involved in the practice of law so long as such a business does not engage in activities that might be considered to be the practice of law and the business does not hold out the availability of legal services as an inducement to prospective customers or clients.
7. A lawyer who is also a real estate broker may list and sell the client's real property for a commission so long as the appropriate ethics rules are satisfied and client consent is obtained after full disclosure.

References: MCPR DR 2-103, DR 3-101(A), DR 3-102(A), DR 3-103(A), DR 5-101, DR 5-104(A), DR 5-105, DR 5-107; C-218; CI-25, CI-236, CI-221, CI-353, CI-520, CI-554, CI-596, CI-600, CI-622, CI-631, CI-725, CI-782, CI-838, CI-931, CI-954.

TEXT

A lawyer is considering an association with a corporation in which the corporation will provide secretarial service and telephone. The lawyer would in effect be the corporate lawyer but paid on a retainer for eight hours of legal service each week. In addition to working as corporate lawyer firm, the lawyer would also like to place his/her real estate license with one of two real estate offices located in the same building. The lawyer has provided the Committee with a drawing depicting an approximate layout of the building, and asks the following questions:

1. Under what circumstances may the lawyer ethically perform legal services for people whom the corporation may refer to the lawyer?
2. Should the lawyer have an entirely separate telephone when performing legal services for clients of the corporation and clients of the lawyer?
3. Should the lawyer have a separate entrance and reception area if the lawyer does work for people other than the corporation?
4. Under what circumstances may the lawyer perform legal work for people who are clients of the corporation and/or is there a form or notification that these people should read and understand before the lawyer may accept any work from them?
5. May the lawyer work in a real estate business with an uncle?
6. May a lawyer use "Member State Bar of Michigan" on business cards?
7. At what point do referrals become solicitation?
8. What sort of communications, general in nature, may a lawyer use in or around the office and the community?
9. Is there a form that a lawyer may use which would fully disclose the potential for conflict of interest to law clients before working with them in any real estate endeavor?

Inquiries 1, 4 and 7 call for the Committee to create hypothetical situations and opine as to possible ethical considerations. The Committee may properly address only specific factual cases of proposed conduct. The Committee also does not render legal or business advice since such matters are beyond its jurisdiction.

It is unclear whether the inquirer will have an interest in either the law firm or the real estate business. As a general matter, a lawyer who has an interest in a real estate or other business may act as counsel to that business. CI-236 and CI-622. The question remains, however, that since the inquirer would be placing a real estate license with one of these companies, does the potential exist for improper solicitation? The same question must be considered regarding the corporation since you have inquired whether you could perform legal services for the latter's customers. The issue, therefore, becomes whether these other businesses would impermissibly serve as feeders to the law practice.

The Committee has previously concluded that:

"A real estate business may, under no circumstances be a vehicle for the referral of business to . . . an attorney. Direct and indirect solicitation is prohibited." CI-236.

Regardless of the virtual abolition of advertising prohibitions, this Committee continues to view the indirect feeding of law practice by a separate occupation as ethically improper. Given the nonspecific nature of this inquiry, the Committee can only conclude that the burden will be upon the inquirer as a lawyer accepting employment and/or association with these other businesses to be scrupulous and circumspect so as not to give any impression of soliciting legal representation from other potential clients. CI-622, CI-838; MCPR DR 2-103.

Insofar as inquiry number 2 is concerned, provided that the inquirer keeps a separate telephone line for the practice of law, and there is little chance of confusion insofar as the inquirer's work in the corporation and real estate activities, the Committee finds no impropriety. CI-622, CI-725 and CI-931.

With respect to inquiry number 3, the Committee concludes that so long as the inquirer complies with all of the provisions of the Michigan Code of Professional Responsibility, the inquirer may conduct a law practice and real estate/mortgage broker financing activities from the same office. The physical arrangements and use of the office space for each activity, however, must be such that the operations and customers remain separate and distinct and do not become intermingled with the space and operations of the office. Use of a common conference room, for example, by the lawyer and the real estate business is permissible so long as those restrictions are observed and the conference room is not used by the lawyer as a law library, or in such other ways to suggest the connection between the lawyer and the real estate business which does not exist. CI-554 and CI-600. Furthermore, the use of separate entrances and reception areas are to be maintained by a lawyer who operates a real estate brokerage business and law office from the same building. CI-221 and CI-520. The Committee is of the opinion that such separate entrances and reception areas are equally applicable where a lawyer operates a mortgage financing business and a law office from the same building.

Concerning inquiry number 5, this matter also requests the Committee to consider possible hypothetical situations rather than specific factual instances of proposed conduct. As a general matter, the inquirer may ethically form a real estate business with a non-lawyer so long as the proposed activities do not involve the practice of law. Should any of the business activities embrace the practice of law, then MCPR DR 3-101(A), DR 3-102(A), and DR 3-103(A) would apply to limit the lawyer's involvement. It would be ethically impermissible for the lawyer to associate with a business that engages in activities that might be considered to be the practice of law or that holds out the availability of legal services as an inducement to prospective customers or clients. CI-25 and CI-954. Moreover, you should not allow a real estate company to give public notice that it would have you serving as a lawyer in its office to help prospective clients of the real estate business with their legal problems. CI-353.

Regarding inquiry number 6, this Committee has previously decided that a lawyer may use the designation, "Member, State Bar of Michigan" in connection with the advertising of another business where the lawyer's qualifications in the other business related to the law practice and the lawyer by virtue of ownership, retains complete control over the use of the lawyer identification contained in the non-legal advertising materials. CI-596, CI-631 and CI-931. We are of the opinion that so long as these criteria are met, the lawyer may use the designation on business cards.

Inquiry number 8 also requests the Committee to consider hypothetical situations of its own creation rather than specific instances of proposed conduct. The Committee can only advise at this time that a lawyer is free to advertise so long as the communication is not false, fraudulent, misleading or deceptive. Moreover, a lawyer may disseminate informative materials to anyone so long as the information is not directed to an individual or group of individuals that have already identified a need for legal services, urging the recipient to employ the services of the lawyer-sender. C-218 and CI-782.

Inquiry number 9 also requests the Committee to render advice in areas beyond its jurisdiction. It should be pointed out, however, that as a general matter, the use of any disclosure form must be preceded by the lawyer's evaluation of responsibilities under Canon 5, particularly MCPR DR 5-101, DR 5-105 and DR 5-107. Presuming these requirements are met and upon obtaining the client's consent after full disclosure on the conflict of interest matter, a lawyer/real estate broker may list and sell the client's real property for a commission. See also DR 5-104(A), CI-520 and CI-931.